Morgan Stanley maintains grand games overweight rating target 5.2

News and technology information Beijing time November 28, Morgan Stanley recently issued an investment report to maintain the "overweight" rating of Shanda gaming stocks, setting the target price at $5.2 trillion.

Morgan Stanley believes that Shanda plays a poor performance due to weak core games, but its ample net cash, strong cash flow, stock repurchase plans and current low valuations remain the main basis for maintaining an "overweight" rating.

The main contents of the report are as follows:

Shanda's third-quarter revenues fell 20% from a year earlier, largely dragged down by weak core games. Despite the recent downturn, we continue to maintain an "overweight" rating, mainly thanks to ample net cash, strong cash flow, stock repurchase schemes and current low valuations. The new game "time and Space Rift" will promote the performance of the Grand game growth.

Third quarter performance: revenue for the 1.081 billion yuan, the chain fell 4%, down 20% year-on-year. Consistent with guidance expectations. Diluted earnings per share of 0.15 U.S. dollars, down 21% year-on-year, lower than we expected.

Positive factors: 1 operation of 38 games, there are 17 new games, 2 of the domestic average monthly active users of 18.4 million, the chain growth of 6%, 3 of the net cash is 485 million U.S. dollars, accounting for more than 50% of the market value. Shanda Games may also buy back 60 million of dollars in shares.

Negative factors: 1 The average monthly pay subscribers fell 8%, year-on-year decline 24%; 2 operating profit margin of 26%, the chain down 5%, Year-on-year decline 1%; 3 The fourth quarter revenue is expected to decline year-on-year 20%; 4 "Legend 2" revenue fell 31%, "Legend of the World" Revenue fell 25% year-on-year.

Valuation: We maintain the "overweight" rating of the Shanda game stock, setting the target price at $5.2.